# econ312ps4sol - San Francisco State University Department...

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San Francisco State University Department of Economics Econ 312 / Spring 2009 Professor: Sang-Yeob Lee Econ 312: Problem Set #4 Thursday, April 23 Question.1 Data were collected from a random sample of 220 home sales from a community in 2003. Let Price denote the selling price (in \$1000), BDR denote the number of bedrooms, Bath denote the number of bathrooms, Hsize denote the size of the house (in square feet), Lsize denote the lot size (in square feet), Age denote the age of the house (in years), Poor denote a binary variable that is equal to 1 if the condition of the house is reported as “poor.” An estimated regression yields ± Price = 119.2 + 0.485 BDR + 23.4 Bath + 0.156 Hsize + 0.002 Lsize + 0.090 Age - 48.8 Poor , ¯ R 2 = 0.72, SER = 41.5 ( 23.9 ) ( 2.61 ) ( 8.94 ) ( 0.011 ) ( 0.00048 ) ( 0.311 ) ( 10.5 ) a Suppose that a homeowner converts part of an existing family room in her house into a new bath- room. What is the expected increase in the value of the house? Answer: \$23,400 (recall that Price is measured in \$1000s).

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econ312ps4sol - San Francisco State University Department...

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